Owning a rental property is a very rewarding business, especially if a real estate investor knows how to increase rental income from his/her rental properties for the highest possible profit. Because even though investing in rental properties is the perfect venture if you are looking for a steady rental income, after a while, the time will come when you need to start making more money from the same property. So, here is how to maximize rental income for long term residential properties:
Related: The Top 6 Strategies to Boost Your Rental Income as a Real Estate Investor
How to Increase Rental Income: Keep Everything in Check
Remember all the location and property analysis you did before you bought your investment property? Well, that’s good. Because you will need to keep performing similar analyses on a regular basis. So, for this, you want to perform the following:
- Conduct a comparative market analysis by finding real estate comps near you. This process will make sure you are keeping up with the real estate market.
- Go through the investment property analysis once more. Check for the appreciation rate, the capitalization rate, the cash on cash return rate and so on. Make sure it indicates steady numbers at the very least.
- Look at the market and the statistics of rental demand. These numbers will help you come up with the best strategies to increase tenant turnout to your property and make sure you are still making money in real estate.
This is the first step to increasing rental income as it will give you a good picture of the strong and weak points of your property that you can work on to make more money.
You can easily perform all the above procedures with the help of our rental income property calculator. Learn more about this amazing real estate investment tool by reading: Rental Income Property Calculator: What Is It and Where to Find One.
How to Increase Rental Income: Carry Out Property Improvements
In order to increase investment property value and consequently the Net Operating Income of your income property, a few upgrades are essential. Look for any damage or things that need fixing and repair them.
Look at the facilities, amenities, and the services around the property and see what you can add or improve. Tenants typically appreciate services that help make their lives a bit easier even if it means paying extra. So, add a new security system, maybe a vending machine, or even a playground if your tenants are parents with children.
Of course, there are many other creative ways if you are wondering how to increase rental income for long term properties. All you have to do is put yourself in your tenants’ shoes to learn a thing or two about superb property management.
How to Increase Rental Income: Perform Thorough Tenant Screening
This tip deals with how to increase rental income by saving money from the very beginning. For this, you will have to rent to the right tenants. A bad tenant will cost you a good chunk of money over time. As a result, you’ll end up paying more in damages than you’re actually making from the rental property.
Therefore, start with a thorough background check on tenants. Find out all about any criminal records, financial records, eviction records, employment, income, etc. Moreover, getting a sense of their lifestyle might help as well. If your tenants are living a party lifestyle, that might be an indicator of frequent damages to your property.
All in all, just find out who your tenants are so that you know what to expect before accepting their application.
Related: Tenant Screening Process: Red Flags Landlords Should Not Ignore
How to Increase Rental Income: Charge Extra Fees
Traditional rentals are the best type of income generating assets. There is always a thousand ways you can make money with them. So here are some for you to consider:
Pet Fees:
Allow pets in your rental property and establish a good pet policy. This way you can make extra money by charging pet fees. Worried about damage from pets? Well, you can charge a certain amount of money in the form of a deposit as protection.
Lease Termination Fees:
If your tenant decides to terminate the lease before it’s over, then this might cause a problem for you. If they vacate the rental property, you will have to go through the whole marketing and screening process all over again. This process might be costly, however, which means that you are not generating an income and you’re losing money on procedural matters. So, to prevent such a situation from happening, charge termination fees which will compensate you if such a situation occurs in the future.
Storage and Other Fees:
If you have an extra storage space, offer it to your tenants in exchange for a monthly fee. Parking fees are also an option as well as cleaning services.
Late Fees:
If your tenant is late on a payment, go ahead and charge a fee on every day they’re late. This way, you make sure you are compensated for each late day.
How to Increase Rental Income: Allow Subletting
Another genius way to increase your rental income is by allowing subletting. However, make sure to implement the condition of acquiring written permission from you. You can charge a fee on every sublet of your rental property per person. Just make sure you are updated and know who is coming in and out of your rental.
Now, if you don’t trust others to sublet your property, you can take matters into your own hands. Rent to roommates. This way you can increase how much you’re charging and your tenants won’t mind since they split it between them.
Related: How Much Should I Charge for Rent?
How to Increase Rental Income: Give Up Professional Management
Cutting rental property expenses is another way to increase your share of profit. Therefore, start by giving up professional property management services. Learn a few things about owning and managing income properties and start doing it yourself.
Here is a source where you can learn a few basics about professional property management: “What Are the Tasks and Responsibilities Covered by Professional Property Management?“
Keep in mind that this strategy for how to increase rental income is not for everyone. If you’re an absolute beginner with a full-time job, you may need professional help. Or if you own multiple rental properties in different cities/states, a professional manager is an asset that can’t be cut from the budget.
How to Increase Rental Income: Claim Tax Write-Offs
Tax deductions are applicable to all of your business expenses. Therefore, make sure you take advantage of this by keeping track of your expenses and keeping up with your business taxes.
Learn From Mashvisor:
Sometimes it is a good idea to sit back and let professionals show you how to get things done. With Mashvisor, you can learn all about how to increase rental property income from your own real estate. All you have to do is click here to go straight to our knowledge center.